e-journal

Optimising errors in signaling corporate collapse using MCCCRA

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Purpose – The purpose of this paper is to put forward an innovative approach for reducing the
variation between Type I and Type II errors in the context of ratio-based modeling of corporate
collapse, without compromising the accuracy of the predictive model. Its contribution to the literature
lies in resolving the problematic trade-off between predictive accuracy and variations between the two
types of errors.
Design/methodology/approach – The methodological approach in this paper – called MCCCRA –
utilizes a novel multi-classification matrix based on a combination of correlation and regression
analysis, with the former being subject to optimisation criteria. In order to ascertain its accuracy in
signaling collapse, MCCCRA is empirically tested against multiple discriminant analysis (MDA).
Findings – Based on a data sample of 899 US publicly listed companies, the empirical results indicate
that in addition to a high level of accuracy in signaling collapse, MCCCRA generates lower variability
between Type I and Type II errors when compared to MDA.
Originality/value – Although correlation and regression analysis are long-standing statistical tools,
the optimisation constraints that are applied to the correlations are unique. Moreover, the
multi-classification matrix is a first in signaling collapse. By providing economic insight into more
stable financial modeling, these innovations make an original contribution to the literature.

Keywords United States of America, Accounting, Modelling, Business failures, Corporate collapse,
Financial ratios, Multiple discriminant analysis,Multi-classification constrained-covariance regression analysis

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Informasi Detail

Judul Seri

International Journal of Accounting and Information Management

No. Panggil

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Penerbit

: Emerald Group., 2012

Deskripsi Fisik

International Journal of Accounting and Information Management Vol. 20 No. 3, 2012 pp. 300-316

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

AKUNTANSI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

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